Wednesday, 25 May 2011

Can't judge a book (or a customer) by it's cover

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As marketers we're always keen to put customers into specific groups or segments. Typically creating personas for these segments that attempt to describe the customer - detailing where they shop, what they watch, what they read or how much they earn.

Sometimes this is based on research; many times it's embellished with our own "insight".

So if asked to describe a typical consumer in Windsor - one of the most affluent areas of the UK - and the stores they frequent, you probably wouldn't be including the discount store Poundland amongst the profiles.

However this hasn't stopped them from opening a store in Windsor and according to reports in the Daily Mail

There are women in pearls elbowing each other out of the way, and a couple of smart old ladies are having the most awful row over a gardening fork.

Ok - so this is an article in the Daily Mail which may mean there is a little creative licence in the reporting. However Poundland state within the Financial Times that 11% of their customers are from AB social-economic groups.

Research from Nielsen last year on coupon usage in the US also demonstrated this apparent mis-match with affluent customers by showing how those earning more than $50k per year actually represent 60% of the top coupon users - something most people would naturally assume would skew to less affluent customers.

Google's recent announcement about bringing coupons to the mobile phone via NFC further back this up. With 64% of Android users being on incomes of $50k or above this is something they clearly see a market for within a more affluent customer base.

Another example of how we can misjudge customers is shown within ebook sales.

Sales of romance and erotica books have apparently exploded within the e-book format with the main reason thought to be the lack of the embarrassment factor associated with these books in hard copy format (such as reading them on public transport).

Looking at the raw sales numbers you could assume that customers no longer enjoy the romance genre; however, understanding customer motivations as to why they aren't purchasing the books allows for a new channel to be utilised and sales revitalised. Research from Tesco for example indicated that 31% of customers said they prefer not to be seen buying the books due to their association with an older demographic. A spokeswoman for Tesco is quoted as saying:-

Some bashful customers prefer to use e-readers so they can access stories privately. However, there is no reason why reading Mills & Boon should have to be a guilty pleasure

A report I heard recently about a European bank who were trying to encourage customers to shop online also demonstrates this.

They attempted to utilise points promotions to over reward this specific behaviour of online shopping but this had little effect. Instead, what finally worked and significantly increased online card usage was in fact the introduction of an online fraud and delivery insurance. Not taking things at face value and instead trying to understand customer motivations around risk allowed them to unlock a new category of spend.

As the saying goes, you really can't judge a book by it's cover. Whether trying to second guess which customers shop at discount retailers or why certain customers won't shop online, it's important to look at all the angles as customers really aren't one-dimensional.

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